Fillable Printable OPM Form 1562
Fillable Printable OPM Form 1562
OPM Form 1562
Application For Return of Excess Retirement Deductions
Federal Employees Retirement System
To avoid delay in payment:
Federal Employees
Civil Service
(1) Complete application in full; (2) Type or print in ink; (3) Read the instructions and tax information included with this form.
Retirement System
Retirement System
1. Name (last, first, middle) 2. Date of birth (mm/dd/yyyy) 3. Social Security Number
4. Are you a citizen of the
Yes
United States of America?
No
5. List all other names you have used (including maiden name, if applicable.) 6. Previous applications filed
Retirement Annuity Deposit
(indicate by "X")
Refund
7. List below all of your civilian and military service for the United States Government
Indicate whether
H
a
ve you paid
retirement
deposit for any
deductions were period including
Periods of Service
Department or Agency
Location of Employment
Title of Position
withheld from your military service?
(Including bureau, branch, or division
(City, State and ZIP Code)
salary. (Check One) (Check one)
where employed)
Fully or
Beginning Date Ending Date Not Not
Partially
Withheld
(mm/dd/yyyy) (mm/dd/yyyy) Withheld Paid
Paid
8. Indicate how you wish to have your excess deductions paid to you if the amount is $200 or more. If your payment is less than $200, the Office of Personnel Management (OPM) cannot roll it over. It will be paid directly to you.
Please carefully read all of the information provided with this form, including the Special Tax Notice Regarding Rollovers, before you make your decision. An error in completing this form could delay your payment or cause
payment in a manner you did not intend. If you elect to roll over less than 100% of your excess deductions, the total amount you roll over to any one organization must be at least $500. Make one choice in each section below,
unless you need additional information. If you need additional information before making this election, check the last box below.
Pay the INTEREST PORTION (Taxable Portion) of my Excess Deductions Refund –
Pay ALL by check made payable to me, with 20% Federal Income Tax Withholding.
Pay ALL by check made payable to my Individual Retirement Arrangement (IRA) or Eligible Employer Plan. (Your financial institution or employer plan must complete the financial institution certification form in this
package.)
Name of Financial Institution or Employer Plan________________________________________________________________________________________________________________________________
Pay ALL to my Thrift Savings Plan Account. (You must sign and submit form TSP-60, Request for a Transfer Into the TSP, to OPM. Form TSP-60 is available on the internet at http://www.tsp.gov.)
Mail the check
to the above institution or plan.
to me. I will deliver the check to the above institution or plan.
Pay the CONTRIBUTION PORTION (After-Tax Portion) of my Excess Deductions Refund –
(The Thrift Savings Plan will not accept this portion of your excess deductions refund.)
Pay ALL by check made payable to me.
Pay ALL by check made payable to my IRA or Eligible Employer Plan. (Your financial institution or employer plan must complete the financial institution certification form in this package.)
Name of Financial Institution or Employer Plan________________________________________________________________________________________________________________________________
Mail the check
to the above institution or plan.
to me. I will deliver the check to the above institution or plan.
I Need Additional Information Before I Decide
I elect to have my excess deductions refund computed and a rollover package with all my options sent to me before I decide how it should be paid. (Electing this option delays your payment at least an additional 30
days.)
U.S. Office of Personnel Management OPM Form 1562
Previous edition is not usable.
Reproduce Locally
Revised April 2005
WARNING:
9.
APPLICANT CERTIFICATION:
Your Signature
Date (mm/dd/yyyy)
Telephone Number
NOTE:
( )
Any intentional false statement in this application or willful misrepresentation relative thereto is a violation of the law punishable by a fine of not more than $10,000 or
imprisonment of not more than 5 years, or both. (18 U.S.C. 1001)
I hereby certify that all statements in this application, including any information I have given, are true to the best of my belief and knowledge and that the tax
withholding election made here reflects my wishes.
(Do not print)
10. Address for mailing refund check (number, street, city, state, ZIP Code) We cannot authorize payment if this address is erased or otherwise changed
(including area code)
This application should not be offered to a financial institution or other person as collateral or security for a loan. An employee must apply for payment personally and payment must be
made directly to him or her. However, outstanding debts to the U.S. Government can, at the Government's request, be withheld from a payment provided all legal requirements are met.
Privacy Act Statement
Solicitation of this information is authorized by the Civil Service Retirement law (Chapter 83, title 5, U.S. Code) and the Federal Employees Retirement law (Chapter 84, title 5, U.S. Code). The information you furnish will be used to
identify records properly associated with your application for Federal benefits, to obtain additional information if necessary, to determine and allow present or future benefits, and to maintain a uniquely identifiable claim file. The
information may be shared and is subject to verification, via paper, electronic media, or through the use of computer matching programs, with national, state, local or other charitable or social security administrative agencies in order to
determine benefits under their programs, to obtain information necessary for determination or continuation of benefits under this program, or to report income for tax purposes. It may also be shared and verified, as noted above, with
law enforcement agencies when they are investigating a violation or potential violation of civil or criminal law.
Executive Order 9397 (November 22, 1943) authorizes the use of the Social Security Number. The Government may use your number in collecting and reporting amounts that you owe the Government. Failure to provide information
may delay or prevent our determination of your eligibility to receive a refund of your excess retirement deductions.
Where to File your Application
1.
If you are employed or have been separated 30 days or less, this application should be forwarded to the office in which you were last employed.
2. If you have been separated more than 30 days and want a refund of your total deductions, use form SF 3106; otherwise, forward this application to the Office of Personnel Management, Federal
Employees Retirement System, P.O. Box 45, Boyers, PA 16017-0045.
OPM Form 1562
Revised April 2005
PRINT
CLEAR FORM
SAVE AS
Instructions to Employee
Do not complete this application if you had more than 5 years of civilian
service as of the effective date of your Federal Employees Retirement
System (FERS) coverage. (Service after 1983 covered by both Civil Service
Retirement System (CSRS) and social security deductions does not count
toward the 5 year limit.) The notice of personnel action concerning your
transfer to FERS will generally indicate if you are eligible for a refund. If
your personnel office determines that you are not eligible for a return of
excess deductions because you had 5 years of creditable civilian service,
your application will be returned to you. If your application is returned to
you, your service will be credited under the Civil Service Retirement
System. You may request, in writing, your personnel office to reevaluate
your application if you believe you have less than five years of creditable
civilian service. If your agency again determines that you are not eligible
Applicants are permitted to roll over their excess retirement deductions
payment to an individual retirement arrangement (IRA) or an eligible
employer plan. The actual retirement deductions are not taxable. However,
any interest paid on the deductions is taxable. If OPM pays the interest to
you, 20% Federal income tax must be withheld. If the taxable portion is
rolled over, we will not withhold any Federal income tax. If you roll all of
your excess deductions into an IRA, you are responsible for accounting
separately for the taxable and non-taxable portions. If you want to roll all of
your excess deductions into an eligible employer plan, you are responsible
for selecting a plan that accounts separately for the taxable and non-taxable
portions. Please note that the Federal Retirement Thrift Savings Plan will
accept the taxable portion (interest portion), but will not accept the
non-taxable portion (actual retirement deductions).
If your excess deductions are less than $200, we are not required to withhold
20% of the interest for Federal income tax and we cannot roll over any of the
amount. You can still roll over an amount equal to the excess deductions
personally after we send the payment to you.
You must complete Question 8 on this application, instructing us how to pay
any excess deductions refund you may be due to receive. Since we cannot
tell you the amount of your excess deductions until we receive your
application and complete the calculations, you can instruct us to prepare an
election form telling you the amount you can roll over (if it is over $200)
after we compute the benefit. If you ask for this detailed information, your
Federal Tax Information
of excess deductions, the Office of Personnel Management (OPM) will
reconsider your application.
If you have less than 5 years of creditable civilian service (excluding service
after 1983 that was simultaneously subject to both CSRS and Social Security
[SSA] deductions) on the effective date of your FERS coverage, you may
request a return of any excess military deposit you may have made, as well
as any excess CSRS deductions. Your service will still be credited under
FERS. You may elect a return while you are an employee. Use this form to
elect such a return. By law, interest is not paid on excess military deposits.
Interest is paid on excess civilian deductions at a rate of 3% through 1984
and a variable, market based rate, thereafter.
case will be held until we send and receive your written election, usually a
delay of payment of at least 30 days.
If you elect to roll over any portion of the excess deductions into an IRA or
eligible employer plan, your financial institution or employer plan must
complete the certification found in this package, before we can process your
election. Two certification forms are provided, since you can roll your
excess deductions over to two different institutions. If you elect to roll over
less than 100% of your excess deductions, the total amount you roll over to
any one organization must be at least $500.
More information is given in the Special Tax Notice Regarding Rollovers,
found in this package. Consult a qualified tax advisor or the Internal
Revenue Service if you need more information on tax matters. OPM cannot
provide you with tax publications or tax advice. You should be aware that
distributions made from the plan to which the rollover is made may be
subject to different restrictions and tax consequences than those that apply to
distributions from OPM.
If you do not complete an election, and your excess deductions are $200 or
more, we will pay the amount directly to you and will withhold 20% of any
interest payable for Federal income tax. You have the option to roll over
part or all of the excess deductions yourself within 60 days after you receive
the payment. If the amount of your excess deductions is less than $200, we
will pay the amount directly to you and no tax will be withheld.
Part 2 - To be completed by employing office
Instructions to Employing Office
Review service listed in item #7 on page 1 of this form and the applicant's personnel folder and complete the following:
1. Eligibility for Return of Excess Contributions
DaysMonthsYears
1a. Total civilian service subject to full CSRS or Foreign Service retirement deductions
1b. Total creditable civilian service not subject to retirement deductions (other than Social Security)
1c. Enter total of 1a. and 1b. (Exclude service subject to SSA and partial retirement deductions)
1d. Does item 1c. show at least 5 years service?
2. Effective date of FERS coverage
Employee is entitled to return of excess deductions
No
Employee is not entitled to return of excess deductions. Return application to employee.
Yes
3. I certify that this individual has less than 5 years of creditable civilian service (excluding service after 1983 subject to both CSRS and Social
Security coverage), is covered by FERS, and is eligible for this refund
.
Signature Date
Part 3 - Instructions to Payroll Office
Please forward the original of this application along with the employee's redesignated civilian or military SF 2806 to OPM under cover of a FERS Register of
Separations and Transfers (SF 3103) separate from regular SF 3103's. Do not intermingle these retirement records with other FERS retirement records being
sent to OPM. If a return of excess military service deductions only is due the employee, follow the instructions in Payroll Office Letter 87-9. If the employee
is eligible for a return of excess civilian deductions only, refer to Payroll Office Letter 87-10 for instructions. If eligibility for both types of refunds has been
established, the associated civilian and military service retirement records should be transmitted to OPM together, along with the original of the application
using the same SF 3103.
Amount of excess military deductions paid by the Payroll Office: $_______________.
(Reproduce Locally)
OPM Form 1562
Revised April 2005
Certification by Financial Institution or Eligible Employer Plan
If Applicant Elects to Roll Over a Refund of Excess Deductions
This must be completed by your financial institution or eligible employer plan.
Name of applicant (last, first, middle) Social Security Number
Name of institution or employer plan
Account number
Certification: My signature below confirms the account number for the individual named in item 1 on the first
page of this form. As a representative of the financial institution or plan named above, I certify that this
institution or plan agrees to accept the funds described above as a direct trustee-to-trustee transfer from the Office
of Personnel Management, to deposit them in an eligible IRA or eligible employer plan as defined in the Internal
Revenue Code, and to account for these monies in compliance with the Internal Revenue Code. I understand that
my signature below authorizes the transfer of taxable and/or non-taxable funds as indicated above.
Address of institution or employer plan
Typed or printed name of certifying representative Phone number (including area code)
( )
Signature of certifying representative
Date of certification (mm/dd/yyyy)
Certification by Financial Institution or Eligible Employer Plan
If Applicant Elects to Roll Over a Refund of Excess Deductions
This must be completed by your financial institution or eligible employer plan.
Name of applicant (last, first, middle) Social Security Number
Name of institution or employer plan Account number
Certification: My signature below confirms the account number for the individual named in item 1 on the first
page of this form. As a representative of the financial institution or plan named above, I certify that this
institution or plan agrees to accept the funds described above as a direct trustee-to-trustee transfer from the Office
of Personnel Management, to deposit them in an eligible IRA or eligible employer plan as defined in the Internal
Revenue Code, and to account for these monies in compliance with the Internal Revenue Code. I understand that
my signature below authorizes the transfer of taxable and/or non-taxable funds as indicated above.
Address of institution or employer plan
Typed or printed name of certifying representative Phone number (including area code)
( )
Signature of certifying representative
Date of certification (mm/dd/yyyy)
Instructions for Rollover to the Federal Retirement Thrift Savings Plan
The Thrift Savings Plan (TSP) will not accept non-taxable (post-tax) monies. You must have an open TSP account. Before the Office of Personnel
Management (OPM) can complete a rollover to your Thrift Savings account, you must sign and submit Form TSP-60, Request for a Transfer Into the
TSP, to OPM. Submit both the TSP-60 and this form, OPM Form 1562, at the same time. OPM will complete its portion of the form and fax it to the
Thrift Savings office for processing. The form must be approved by the Thrift Savings Board and the Board must notify OPM to transfer the funds.
Form TSP-60 is available on the internet at http://www.tsp.gov/forms.
Special Tax Notice Regarding Rollovers
Your excess retirement deductions payment consists of a taxable
portion (any interest payable) and an after-tax portion (the actual
retirement contributions that you paid into the retirement system).
This notice explains how you can continue to defer federal income
tax on the interest payable on your excess deductions payment from
the Federal Employees Retirement System (FERS) and contains
important information you will need before you decide how to
receive your excess retirement deductions payment.
This notice is provided to you because your excess retirement
deductions payment is eligible for rollover by you or the Office of
Personnel Management (OPM) to a traditional Individual Retirement
Arrangement (IRA) or an eligible employer plan. A rollover is a
payment by you or OPM of all or part of your benefit to another plan
or IRA that allows you to continue to postpone taxation of that
benefit until it is paid to you. Your payment cannot be rolled over to
a Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings
Account (formerly known as an education IRA). An "eligible
employer plan" includes a plan qualified under section 401(a) of the
Internal Revenue Code, including a 401(k) plan, profit-sharing plan,
defined benefit plan, stock bonus plan and money purchase plan; a
section 403(a) annuity plan; a section 403(b) tax-sheltered annuity;
and an eligible section 457(b) plan maintained by a governmental
employer (governmental 457 plan).
An eligible employer plan is not legally required to accept a rollover.
Before you decide to roll over your payment to an employer plan, you
should find out whether the plan accepts rollovers and, if so, the types
of distributions it accepts as a rollover. You should also find out
about any documents that are required to be completed before the
receiving plan will accept a rollover. Even if a plan accepts rollovers,
it might not accept rollovers of certain types of distributions, such as
after-tax amounts. The portion of your payment that represents your
actual retirement contributions, is an after-tax amount. (The interest
payable on this amount is a taxable amount.) If this is the case, you
may wish instead to roll your payment over to a traditional IRA or
split your rollover amount between the employer plan in which you
will participate and a traditional IRA. If an employer plan accepts
your rollover, the plan may restrict subsequent distributions of the
rollover amount or may require your spouse's consent for any
subsequent distribution. A subsequent distribution from the plan that
accepts your rollover may also be subject to different tax treatment
than distributions from OPM. Check with the administrator of the
plan that is to receive your rollover prior to making the rollover.
If you have a Federal Retirement Thrift Savings Plan account, you
may roll over the taxable portion (interest portion) of your payment
into that account. The Thrift Savings Plan (TSP) will not accept
non-taxable monies (the actual retirement contributions that are being
paid). To accomplish a rollover to the TSP, you will need to submit
form TSP-60 to us. See Part II, Direct Rollover for more
information.
Summary
There are two ways you may be able to receive an excess deductions
payment that is eligible for rollover.
1) Your payment can be made directly to a traditional IRA that you
establish or to an eligible employer plan that will accept it and hold
it for your benefit ("DIRECT ROLLOVER"); or
2) The payment can be PAID TO YOU.
If you choose a DIRECT ROLLOVER of your excess deductions
payment
•
The interest portion of your payment (the taxable portion) will not
be taxed in the current year and no income tax will be withheld.
•
You choose whether your payment will be made directly to your
traditional IRA or to an eligible employer plan that accepts your
rollover. Your payment cannot be rolled over to a Roth IRA, a
SIMPLE IRA, or a Coverdell Education Savings Account because
these are not traditional IRAs.
•
The interest portion of your payment (the taxable portion) will be
taxed later when you take it out of the traditional IRA or the eligible
employer plan. Depending on the type of plan, the later distribution
may be subject to different tax treatment than it would be if you
received a taxable distribution from OPM.
If you choose to have your excess deductions PAID TO YOU:
• You will receive 80% of the interest portion (taxable amount) of the
payment, because OPM is required to withhold 20% of that amount
and send it to the IRS as income tax withholding to be credited
against your taxes. You will receive all of your actual retirement
contributions, since taxes have already been paid on this amount.
• The interest portion of your payment will be taxed in the current
year unless you roll it over. If you receive the payment before age
59-1/2, you may have to pay an additional 10% tax.
• You can roll over all or part of the refund payment by paying it to
your traditional IRA or to an eligible employer plan that accepts
your rollover within 60 days after you receive the payment. The
amount of the interest portion rolled over will not be taxed until
you take it out of the traditional IRA or the eligible employer plan.
• If you want to roll over 100% of the payment to a traditional IRA or
an eligible employer plan, you must find other money to replace the
20% of the taxable portion (interest amount) that was withheld. If
you roll over only the 80% of the interest amount that you received,
you will be taxed on the 20% that was withheld and that is not
rolled over.
Your Right to Waive the 30-Day Notice Period
Generally, neither a direct rollover nor a payment to you can be made
until at least 30 days after your receipt of this notice. Thus, after
receiving this notice, you have at least 30 days to consider whether or
not to have your withdrawal directly rolled over. If you do not wish to
wait until this 30-day notice period ends before forwarding your
application to your former agency or OPM, you may waive the notice
period by making an election indicating whether or not you wish to
make a direct rollover.
More Information
I. Payments That Can and Cannot Be Rolled Over
Excess deductions payments are "eligible rollover distributions." This
means that they can be rolled over to a traditional IRA or to an eligible
employer plan that accepts rollovers. They cannot be rolled over to a
Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings Account.
Both the taxable portion (interest) and the after-tax portion (actual
retirement contributions) can be rolled over.
After-tax Contributions. After-tax contributions (your actual retirement
contributions, excluding any interest paid) may be rolled into either a
traditional IRA or to certain employer plans that accept rollovers of the
after-tax contributions. The following rules apply:
a) Rollover into a Traditional IRA. You can roll over your after-tax
contributions to a traditional IRA either directly or indirectly. The
actual retirement contributions being refunded to you are after-tax
contributions. You do not owe any tax on this amount. Only the
interest portion is taxable.
If you roll over after-tax contributions to a traditional IRA, it is your
responsibility to keep track of, and report to the IRS on the
applicable forms, the amount of these after-tax contributions. This
will enable the nontaxable amount of any future distributions from
the traditional IRA to be determined.
Once you roll over your after-tax contributions to a traditional IRA,
those amounts CANNOT later be rolled over to an employer plan.
b) Rollover into an Employer Plan. You can roll over after-tax
contributions to an employer plan using a direct rollover if the other
plan provides separate accounting for amounts rolled over,
including separate accounting for the after-tax employee
contributions and earnings on those contributions. You CANNOT
roll over after-tax contributions to a governmental 457 plan. If you
want to roll over your after-tax contributions to an employer plan
that accepts these rollovers, you cannot have the after-tax
contributions paid to you first. You must instruct OPM to make a
direct rollover on your behalf. Also, you cannot first roll over
after-tax contributions to a traditional IRA and then roll over that
amount into an employer plan.
OPM Form 1562
Revised April 2005
II.II. DirectDirect RolloverRollover
A DIRECT ROLLOVER is a direct payment of your excess deductions
to a traditional individual retirement arrangement (IRA) or an eligible
employer plan that will accept it. You can choose a DIRECT
ROLLOVER of all or any portion of your payment, as described in
Part I above. You are not taxed on the taxable portion of your payment
(interest amount) for which you choose a DIRECT ROLLOVER until
you later take it out of the traditional IRA or eligible employer plan. In
addition, no income tax withholding is required for any taxable portion
of your payment for which you choose a DIRECT ROLLOVER. You
cannot choose a DIRECT ROLLOVER if your excess deductions
payment is less than $200.
DIRECT ROLLOVER to a Traditional IRA. You can open a traditional
IRA to receive the direct rollover. If you choose to have your excess
deductions paid directly to a traditional IRA, contact an IRA sponsor
(usually a financial institution) to find out how to have your payment
made in a direct rollover to a traditional IRA at that institution. If you
are unsure of how to invest your money, you can temporarily establish
a traditional IRA to receive the payment. However, in choosing a
traditional IRA, you may want to make sure that the traditional IRA
you choose will allow you to move all or a part of your payment to
another traditional IRA at a later date, without penalties or other
limitations. See IRS Publication 590, Individual Retirement
Arrangements, for more information on traditional IRAs (including
limits on how often you can roll over between IRAs).
DIRECT ROLLOVER to an Eligible Employer Plan. If you want a
direct rollover to an eligible employer plan, ask the plan administrator
of that plan whether it will accept your rollover. An eligible employer
plan is not legally required to accept a rollover. Even if the employer's
plan does not accept a rollover, you can choose a DIRECT
ROLLOVER to a traditional IRA. If the employer plan accepts your
rollover, the plan may provide restrictions on the circumstances under
which you may later receive a distribution of the rollover amount or
may require spousal consent to any subsequent distribution. Check
with the plan administrator of that plan before making your decision.
Change in Tax Treatment Resulting from a DIRECT ROLLOVER. The
tax treatment of any payment from the eligible employer plan or
traditional IRA receiving your DIRECT ROLLOVER might be
different than if you received your payment in a taxable distribution
directly from the Office of Personnel Management (OPM).
Direct Rollover to the Thrift Savings Plan (TSP). If you choose to
roll part or all of the taxable portion of your payment into your TSP
account, you need to submit form TSP-60, Request for Transfer
Into the TSP, along with your Application for Return of Excess
Retirement Deductions. This form is available on the internet at
http://www.tsp.gov. Fill out your portion of the form; we will complete
our portion and fax it to the TSP office for processing. The form must
be approved by the Thrift Savings Board and the Board must notify
OPM to transfer the funds.
III. Payment Paid to You
If your payment can be rolled over (see Part I on the previous page) but
the payment is made directly to you, the interest portion is subject to
20% federal income tax withholding (state tax withholding may also
apply). The payment is taxed in the year you receive it unless, within
60 days, you roll it over to a traditional IRA or an eligible employer
plan that accepts rollovers. If you do not roll it over, special tax rules
may apply.
Income Tax Withholding:
Mandatory Withholding. If any portion of your payment can be rolled
over under Part I above and you do not elect to make a DIRECT
ROLLOVER, OPM is required by law to withhold 20% of the interest
portion (taxable amount). This amount is sent to the Internal Revenue
Service (IRS) as federal income tax withholding. For example, if you
can roll over a taxable payment of $10,000, only $8,000 will be paid to
you because OPM must withhold $2,000 as income tax. However,
when you prepare your income tax return for the year, unless you make
a rollover within 60 days (see "Sixty-Day Rollover Option" below), you
must report the full $10,000 as a taxable payment from OPM. You
must report the $2,000 as tax withheld, and it will be credited against
any income tax you owe for the year. There will be no income tax
withholding if your payments for the year are less than $200.
Sixty-Day Rollover Option. If you receive a payment that can be rolled
over under Part I above, you can still decide to roll over all or part of it
to a traditional IRA or to an eligible employer plan that accepts
rollovers. If you decide to roll it over, you must contribute the amount
of the payment you received to a traditional IRA or eligible employer
plan within 60 days after you receive the payment. The portion of your
payment that is rolled over will not be taxed until you take it out of the
traditional IRA or the eligible employer plan.
You can roll over up to 100% of your payment that can be rolled over
under Part I above, including an amount equal to the 20% of the taxable
portion that was withheld. If you choose to roll over 100%, you must
find other money within the 60-day period to contribute to the
traditional IRA or the eligible employer plan, to replace the 20% that
was withheld. On the other hand, if you roll over only the 80% of the
taxable portion that you received, you will be taxed on the 20% that
was withheld.
Example: The taxable portion of your payment that can be rolled over
under Part I above, is $10,000, and you choose to have it paid to you.
You will receive $8,000, and $2,000 will be sent to the IRS as income
tax withholding. Within 60 days after receiving the $8,000, you may
roll over the entire $10,000 to a traditional IRA or an eligible employer
plan. To do this, you roll over the $8,000 you received from OPM, and
you will have to find $2,000 from other sources (your savings, a loan,
etc.). In this case, the entire $10,000 is not taxed until you take it out of
the traditional IRA or an eligible employer plan. If you roll over the
entire $10,000, when you file your income tax return you may get a
refund of part or all of the $2,000 withheld.
If, on the other hand, you roll over only $8,000, the $2,000 you did not
roll over is taxed in the year it was withheld. When you file your
income tax return, you may get a refund of part of the $2,000 withheld.
(However, any refund is likely to be larger if you roll over the entire
$10,000.)
Additional 10% Tax If You Are under Age 59-1/2. If you receive a
payment before you reach age 59-1/2 and you do not roll it over, then,
in addition to the regular income tax, you may have to pay an extra tax
equal to 10% of the taxable portion of the payment. The additional
10% tax generally does not apply to (1) payments that are paid after
you separate from service with your employer during or after the year
you reach age 55, (2) payments that are paid because you retire due to
disability, (3) payments that are paid directly to the government to
satisfy a Federal tax levy, (4) payments that are paid to an alternate
payee under a qualified domestic relations order, or (5) payments that
do not exceed the amount of your deductible medical expenses. See
IRS Form 5329 for more information on the additional 10% tax.
Additional Tax Information
This notice summarizes only the federal (not state and local) tax rules
that might apply to your payment. The rules described above are
complex and contain many conditions and exceptions that are not
included in this notice. Therefore, you may want to consult with the
IRS or a professional tax advisor before you take a payment of your
excess deductions from OPM. You can find more specific information
on the tax treatment of payments from qualified employer plans in IRS
Publication 575, Pension and Annuity Income, and IRS Publication
590, Individual Retirement Arrangements. For an overview of the tax
consequences of payments from the Civil Service Retirement System
and Federal Employees Retirement System, you can also consult IRS
Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits .
These publications are available from your local IRS office, on the
IRS's Internet Web Site at www.irs.gov, or by calling
1-800-TAX-FORMS.
OPM Form 1562
Revised April 2005
